2017-TIOL-343-SC-CX
CCE Vs ABHISHEK COTSPIN MILLS LTD : SUPREME COURT OF INDIA (Dated: September 8, 2017)
CX - CESTAT - 2016-TIOL-1578-CESTAT-MUM while rejecting appeal filed by CCE, Pune-II observed that when the Ministry of Commerce treated the 'paper cones' as packing material explicitly, the CE department could not treat the same as 'raw material' - Accordingly, Imported Paper Cone treated to be a packing material and not raw material and benefit of notfn. 8/97-CE held as admissible to cotton yarn wound on paper cone and cleared into DTA - Revenue in appeal before Supreme Court. Held: After condoning delay, Court perused the relevant material and found no merit in the appeal - Civil Appeal dismissed: Supreme Court.
Appeal dismissed
2017-TIOL-342-SC-CX
VEWVOX SYSTEMS Vs CC, CE & ST : SUPREME COURT OF INDIA (Dated: September 5, 2017)
CX - Classification - Colour Television Sets cleared in SKD Condition held to be correctly classifiable under 8528.00 and not under Entry 8529 of the Central Excise Tariff Act, 1985 & accordingly assessees' Civil appeal was dismissed - Review petition filed. Held: In the opinion of the Supreme Court, no case is made out for review of order dated 31st March, 2017 - 2017-TIOL-163-SC-CX - Consequently, the review petition is dismissed: Supreme Court.
Review petition dismissed
2017-TIOL-341-SC-CX
CCE Vs WINSOME YARNS LTD ETC : SUPREME COURT OF INDIA (Dated: September 1, 2017)
CX – Assessee, a 100% EOU, is engaged in the manufacture of cotton yarn and blended yarn and claimed concessional rate of duty for such clearances in terms of notification 8/97-CE date 01/3/97which mandated that goods cleared should have been manufactured from raw materials produced or manufactured in India – Benefit of concession denied and duty demand confirmed on the main ground that the appellant failed to establish maintenance of separate records of indigenous/imported raw materials – In appeal, CESTAT after examining the evidences on record concluded that the findings recorded in the impugned order were arbitrary and without sound legal basis; that the Commissioner had failed to appreciate that the appellant were using domestic cotton also for manufacture and export of yarn; that the reliance placed on emails was without any corroboration and not sustainable; that the elaborate computerised documentation maintained by assessee had not been examined in correct perspective by the adjudicating authority before confirming the demand – Revenue in appeal before Supreme Court.
Held: Delay of 237 days in filing appeals is not satisfactorily explained, therefore, application for condonation of delay is dismissed – Also, Court finds no cogent reason to entertain the appeals - The judgment impugned does not warrant any interference - Appeals are dismissed on the ground of delay as well as on merits: Supreme Court
Appeals dismissed
2017-TIOL-1856-HC-MAD-IT
CIT Vs DR HAKEEM S A SYED SATHAR: MADRAS HIGH COURT (Dated: August 21, 2017)
Income Tax – Sections 143(3) & 158BC.
Keywords – Cost of medicines - Deduction on gross receipts - Medical practitioner
The assessee is a medical practitioner in traditional Unani medicine. Upon a search of the assessee's clinic, the revenue alleged suppression of receipts, inflated purchase prices of medicines, unaccounted income generated by suppressing receipts, bogus sundry debtors, advertisement expenses not accounted for, and non accounting of income received on lodging house. Further, some amount of cash and some gold jewellery were found, albeit not seized. The total income of the assessee was determined at Rs.2,59,57,634/-. Later, the CIT(A) upheld all the additions although the addition on account of the inflated prices of medicines was set aside. Subsequently, the Tribunal held that the assessee had been suppressing income, and allowed 42% gross receipts calculated by the Revenue, as deduction on account under receipt or cost of medicines estimated towards non-receipt of fee as well as cost of medicines.
On appeal, the High Court held that,
Whether when it is established that the assessee was suppressing professional receipts, any deduction for non-receipt of fees, determined on ad hoc basis, by the Tribunal is legally sustainable - NO: HC
++ the tribunal clearly stated that the assessee was suppressing professional receipts. Therefore, the revenue gave an option that there should not be professional receipts on the basis of Consultation register and accepted the order passed by the authority. It is also stated that initially the assessee submitted that 20% of the money was not received and thereafter, submitted that upto 30% of the money was not received. The Tribunal has granted relief to the assessee on the ground that the CIT(A) passed an order stating that there were unaccounted receipts and there would be unaccounted purchase of medicines, but no benefit was granted in the absence of any proof for the same. But the Tribunal granted deduction @ 42% from the gross receipts estimated for non-receipts of fee, as well as cost of medicines. The block assessment has been made only, with the books seized and suppression of undisclosed income. Without any materials and guidelines, the Tribunal has granted relief of 42% deduction on the cost of medicines and non receipt of fees. Simply by observing that the AO himself had estimated the cost of medicine at about 42% for the year 2001-02, the Tribunal has granted deduction 42% towards cost of medicines and non receipt of fees, and the same which is not explained. Therefore, the assessee is not entitled for the deduction of 42% from the gross receipts towards non receipt of fees and cost of medicines;
++ the CIT(A) has granted deduction only for the purchase of medicines and not for the non receipt of fees by the assessee. There is no discussion or any evidence, to come to such conclusion by the Tribunal, for granting deduction of 42% towards cost of medicines and non receipt of fees. Hence, there are no materials or guidelines or discussion of evidence with regard to deduction of 42% granted by the Tribunal towards non receipt of fees and cost of medicines. Considering the decisions in the cases of N.K.Dharmadas vs. State Transport Appellate Tribunal, Narayanan Chettiar Industries vs. Income-Tax Officer and Nitin Pahadiya vs. Union of India, the impugned order of the Tribunal on merits being set aside.
Revenue's appeal allowed
2017-TIOL-1855-HC-MUM-CUS
CC Vs LACTOSE (INDIA) LTD : BOMBAY HIGH COURT (Dated: August 8, 2017)
Cus – Question is Whether CESTAT is right in law in holding that the Respondents are eligible to import Lactose against DFIA licence when the same was admittedly not used as an ingredient in the export product?" Held: Issue of the Policy Circular being applicable provided it is issued prior to the date of issuance of licence is no longer res integra - In the present case it is an admitted fact that the DFIA Licence bearing endorsement of transfer was issued prior to the issuance of the Circular dated 31st January 2011 and hence, the Notification No.98/2009 dated 11th September 2009 was applicable in the case of the import of lactose – CESTAT, upon considering the facts of the present case, is justified in arriving at the finding that the change in Policy would not be applicable to the licence issued prior thereto and hence the Respondents are entitled to the benefit of Notification No. 98/2009 – Cus, in terms of the DFIA presented to the Customs – CESTAT order concurred with and Revenue appeal dismissed: High Court [para 6, 7]
Appeal dismissed
2017-TIOL-1854-HC-MAD-CUS
ALAM IMPEX Vs ASST.CC : MADRAS HIGH COURT (Dated: August 21, 2017)
Cus - the petitioner-assessee had imported goods which were seized on grounds of alleged mis-declaration with intent to evade duty - Upon examination, some goods were alleged to be counterfeit - The revenue also alleged that the assessee used the import/export code of a different person - The assessee sought provisional release of the goods u/s 110A of the Act r/w Customs ( Provisional Duty Assessment Regulations) 1963 - The various types of goods imported were under examination by the DRI and report of an Expert is awaited.
Held - Considering the aforementioned facts, the revenue directed to consider the assessee's application for provisional release of goods, within 10 days of receipt of the expert report: High Court (Para 2,3,4)
Writ petition allowed
2017-TIOL-1853-HC-MAD-CUS
BALAJI DEKORS Vs CC : MADRAS HIGH COURT (Dated: August 8, 2017)
Cus - the petitioner-assessee is engaged in manufacture of premium pre-laminated particle board and MDF Boards, and also import them - A consignment was imported and warehoused with the Respondent No.3 (R3) - The goods were detained at the instance of the 1st and 2nd respondents, who had undertaken an investigation on the cargo - The second respondent informed the third respondent that the consignment was detained by the SIIB, and as per Regulation 6(1)(l) of the Handling of Cargo in Customs Area Regulation, 2009, the custodian shall not charge rent or demurrage for the goods under detention - The custodian in the instant case, is the third respondent - The assessee claimed that though a specific order was issued by the department for grant of waiver, the third respondent have not granted full relief to the assessee in terms of such directive.
Held - the third respondent, the Container Terminal, only granted 25% waiver - Such action is contrary to the aforementioned Regulation 6(1)(l) - Besides, the third respondent did not question the orders of the second respondent, and so was bound to follow such orders in letter and spirit - Thereby, the question of now interpreting the order as extending partial relief is not permissible as the Regulation uses the expression "shall not charge any rent or demurrage", which mandates that the third respondent is prohibited from charging any rent or demurrage during the period of detention - Hence there is no escape from the implementation of Regulation No.6(1)(l), which is statutory in nature - Hence, the third respondent directed to waive off the rent/demurrage charges on the goods detained at the instance of the second respondent: High Court (Para 3,4,5,9,10,11,12)
Assessee's writ petitions allowed
2017-TIOL-1852-HC-MUM-CX
SHRI GAJANAN ROLLING MILLS Vs UoI : BOMBAY HIGH COURT (Dated: August 29, 2017)
CX - the assessee is a registered SSI unit, which availed Modvat credit under Notfn. No. 1/93 - The revenue, vide a subsequent O-i-O imposed a duty demand with penalty - The Commr.(A) held that the assessee was entitled to the benefit of Deemed Credit Order of Rs. 4,45,839/-, even after crossing the limit of Rs. 75,00,000/-, as long as specified clearances of the assessee had not crossed limit of Rs. two crores as per the Notfn. No. 1/93 - The Tribunal, in an ex parte order confirmed the disallowance of Modvat credit and confirmed the duty demand with penalty - The assessee's application seeking recall of the ex parte order was set aside.
Held - the present appeal was heard along with First Appeal No. 95 of 2005 - The issue involved in the present appeal and in the First Appeal No. 95/2005 were identical, and in a seperate order, this Court allowed the First Appeal No. 95 of 2005 - Since the facts in First Appeal No. 95 of 2005 apply squarely to those of the present case no separate order is required to be passed for the latter - Issue at hand resolved in favor of the assessee: High Court (Para 3,4,5,8,10)
Appeal allowed
2017-TIOL-1851-HC-MAD-CX
GLOVIS INDIA LTD Vs CCE: MADRAS HIGH COURT (Dated: August 17, 2017)
CX - the petitioner-assessee filed a rebate application, which is sought to be disposed of, in light of a Tribunal order to that effect - The rebate claim was rejected on grounds that the process engaged in by the assessee did not amount to 'manufacture' as defined u/s 2(f)(iii) - Moreover revenue alleged that the goods were not processed in the factory, thereby not amounting to manufacture - In a seperate SCN and adjudication, duty demand for recovery of Cenvat credit was imposed - However, the SCN and its reply pertaining to the rebate claim was not adjudicated for a long time - The Tribunal held that the activities of the assessee amounted to manufacture & were eligible for Cenvat credit on the inputs/input services used in the export of goods - Duty demands were set aside.
Held - it was unclear whether the revenue intended to file an appeal against such order of the Tribunal - In the interregnum, however, the assessee could not be denied the benefits flowing from the Tribunal order - However, the assessee ought to have sought for early adjudication of the rebate claim, and on the strength of the Tribunal order w.r.t. the claim for cenvat credit, could not seek a direction that the revenue expedite adjudication of the rebate claim - Hence, revenue directed to pass appropriate orders in both claims: High Court (Para 3,4,5,6,10,11,12)
Writ petition allowed
2017-TIOL-1850-HC-MAD-CX
KALI AERATED WATER WORKS (KARAIKUDI) Vs JCCE : MADRAS HIGH COURT (Dated: July 05, 2017)
CX - the petitioner-assessee was engaged in the manufacture of goods bearing the brand name of another person - Demand for Basic Excise Duty was imposed on the assessee on grounds that the assessee had removed excisable goods without payment of duty - Whether the assessee was entitled to exemption from payment of duty such goods bearing the brand name of another person.
Held - the aforementioned issue was resolved in a previous case involving the same assessee and wherein, the said issue had been resolved in favor of the assessee, as considering the Trade Mark registrations, the assessee was found to be the owner of the brand names - Following such precedent, the issue stands settled in favor of the assessee - Duty demand set aside: High Court (Para 2,3,4)
Assessee's writ petition allowed
2017-TIOL-1248-ITAT-DEL
DCIT Vs POWER GRID CORPORATION INDIA LTD : DELHI ITAT (Dated: January 9, 2017)
Income Tax - Sections 115JB, 143(3) & 271(1)(c).
Keywords: Concealment of income - Computation of book profit - Electricity company - Inaccurate particulars of income & Method of computation of total income.
The Assessee is a Central Public Sector Enterprise, engaged in transmitting power to State Electricity Board from generating units. The Assessee had filed its return at Rs. NIL, but, paid taxes on the book profit u/s 115JB. While completing the assessment u/s 143(3), the AO made an addition on account of disallowance of advance against depreciation and to the book profit u/s 115JB. The CIT(A) had confirmed the additions made by the AO, however, the Assessee withdrew its appeal before the co-ordinate bench. Further, the AO stated that the Assessee had not preferred the appeal and the amount was added, hence, a peanlty was levied u/s. 271(1)(c) on the said two additions holding that the Assessee had furnished the inaccurate particulars of its income. The Assessee then preferred an appeal before the CIT(A), wherein, the penalty on the two additions was deleted.
On appeal, the Tribunal held that,
Whether acceptance of disallowance of advance depreciation under normal method will prove that the Assesse has furnished inaccurate particulars of income and attracts penalty u/s 271(1)(c) - NO: ITAT
++ the main disallowance on which the penalty has been levied by the AO is advance against depreciation. It is necessary to understand what the advance against depreciation is in case of electricity company. According to the decision of the Supreme Court in the case of NHPC vs. CIT, advance against depreciation is an income received in advance and therefore, is not hit by Clause (b) of Explanation 1 while working out the Book Profit of the Assessee for the purpose of Income Tax Returns u/s 115JB;
++ subsequently, the Coordinate Bench vide order dated 30.9.2014 decided the issue with respect to disallowance of the same in the normal computation of total income. It has been held by the Coordinate Bench that it cannot be added or disallowed under the computation of income under normal method u/s 143(3). Therefore, it is apparent that above two judicial precedents has clearly established that addition on account of advance against depreciation cannot be made either at the time of computation of book profit u/s 115JB or under the normal computation of total income;
++ in the case of the Assessee the addition in both the method of computation of total income this amount has been made i.e. normal computation as well as computation u/s 115JB. We are not on the issue of disallowance or addition while determining the income of the Assessee, but on the levy of penalty u/s 271(1)(c) on these disallowances accepted by the Assessee. The issue of disallowance has already reached finality in the hands of the Assessee for both the AYs against the Assessee. It is a settled principle of law that where there are two opinions on allowability of expenditure, it makes it debatable and on such disallowance penalty u/s 271(1)(c) cannot be levied. The present disallowance of advance depreciation is ultimately settled by the Supreme Court and that too in favor of the Assessee, therefore even if the Assessee has accepted the addition in its hands, it cannot be said that Assessee has furnished inaccurate particulars of income. Hence on this disallowance penalty u/s 271(1) (c) cannot be levied.
Whether if the Assessee prefers not to contest the addition or disallowance while computing the Book Profit at higher forums, it would have any bearing on the statutory provisions of section 271(1)(c) - NO: ITAT
++ the Supreme court in the case of CIT vs. Reliance Petro products Limited has held that "... A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars...";
++ the claim of the Assessee is not at all disallowable. We do not find any provisions u/s 271(1)(c) which depends upon the filing of the appeal by the Assessee before the Higher Forum contesting the addition. Therefore, whether the Assessee files an appeal or did not contest the addition or disallowance at higher forums, it does not have any bearing on the statutory provisions of section 271(1)(c). In view of this, we do not incline to uphold the order of the AO on levy of penalty u/s 271(1)(c) on advance against depreciation disallowed while computing the Book Profit u/s 115JB as well as under the normal computation of total income. In view of this, we do not find any infirmity in the order of the CIT(A) in cancelling the penalty levied by the AO.
++ with respect to other disallowances of I-T recovery and Transmission charges, we are of the opinion that both these issues were amply disclosed in the Audited Accounts of the Assessee. These Notes also shows that the same have been based on the order of the CERC and the claim has been disputed by the payer. In view of this, the income have not been shown by the Assessee for tax purposes;
++ subsequently, on the submission of the Assessee, sum have been added to the income of the Assessee for the AY 2007-08. On that basis, the addition was made in AY 2005-06. In the present case, the accrual of the income itself is in doubt when the payee has provided the same, but the payer has not admitted the liability. Further, the Assessee itself has brought on record before the AO that as the same amounts have been received in AY 2007-08, it can be added in the income of the current year and may be excluded from AY 2007-08. The full facts of particular dispute and uncertainty arising on account of receipt of the income were disclosed and reason why Assessee did not offer it for taxation was also available before AO. Therefore, it cannot be said that Assessee has furnished inaccurate particulars thereof. Therefore, We concur with the view of that CIT(A) in deleting the penalty u/s 271(1)(c) on both these disallowances. In view of this, we do not find any infirmity in the order of the CIT(A) in deleting the penalty on I-T Recoverable from State Electricity Board of Rs. 1.53 Crores and Transmission charges of Rs. 12.09 crores;
++ we confirm the order of the CIT(A) deleting the penalty u/s 271(1)(c) for AY 2006- 07 and AY 2005-06. In the result, both the Appeals of the Revenue are dismissed.
Revenue's appeal dismissed
2017-TIOL-1247-ITAT-DEL
DCIT Vs INTERTEK INDIA PVT LTD : DELHI ITAT (Dated: August 30, 2017)
Income Tax - Section 32(1) Explanation 3 (b).
Keywords: Goodwill- Intangible asset & Slump sale.
The Assessee-company had filed its return claiming a depreciation on account of Goodwill. During the assessment proceeding, the Assessee submitted that by Business Transfer Agreement (BTA), the Assessee had purchased the Quality Registrar division of KPMG as an on-going concern on slump sale basis and the consideration paid over and above the book value of the net current asset appeared in the balance sheet as 'Goodwill' upon which the depreciation was claimed by treating the same as intangible asset. The Assessee also sumitted the valuation report of independent valuer, M/s. Grant Thornton, wherein values were assigned to each of the intangible assets acquired by the Assessee under BTA.
Under the provisions of section 32, the AO disallowed the claim of depreciation made on Goodwill. On appeal, the CIT(A) held in favour of the assessee.
On appeal, the Tribunal held that,
Whether Goodwill is an asset covered under Explanation 3(b) to Sec 32(1) and not under the expression 'any other business or commercial rights of similar nature' - YES: ITAT
++ we have gone through the order passed by the coordinate Bench of the Tribunal in Assessee's own case for the AY 2007-08 whereby it was held that "... By business transfer agreement dated 15.12.2005, the assessee had purchased quality register division of KPMG and the consideration made by appellant over and above book value of net current asset as appearing in books as on 15.12.2005 was recorded as goodwill was eligible for depreciation by observing that the same was not included in the definition of intangible asset u/s 32. However, CIT(A) on the basis of submissions filed by the A.R. and relying upon the judgement of Supreme Court in the case of CIT Vs Smifs Securities Ltd., has held that goodwill is an asset which is covered under Explanation (3)(b) of Section 32(1) which would fall under the expression 'any other business or commercial rights of similar nature'...";
++ following the order passed by the coordinate Bench of the Tribunal in Assessee's own case for AY 2007-08 and 2008-09 and the appeal filed by the Revenue in High Court has also been dismissed in the light of the decision rendered by Supreme Court in CIT vs. Smifs Securities Limited;
++ we are of the considered view that the Goodwill is an asset squarely covered under Explanation 3(b) to section 32(1) and is not covered under the expression 'any other business or commercial rights of similar nature'. So, in terms of BTA dated 15.12.2005, the Goodwill being an intangible property, is entitled for depreciation. So, finding no illegality or perversity in the order passed by CIT(A), we hereby dismiss the appeal filed by the Revenue.
Revenue's appeal dismissed
2017-TIOL-1246-ITAT-DEL + Story
TOSHIBA INDIA PVT LTD Vs DCIT : DELHI ITAT (Dated: August 30, 2017)
Income Tax - Sections 37(1), 40(a)(ia), 143(3) & 234B
Keywords - Write-off - Legal & professional fees - Travel & conveyance expenses.
The assessee company is engaged in providing services to its holding company, subsidiaries and its associates. In the year concerned, the assessee started trading of home appliances such as refrigerators and washing machines manufactured by its associate companies. The assessee filed its return of income at Rs. 15436200/-, but on assessment, the AO enhanced it to Rs. 22574110/-. The AO also made several disallowances such as - a) legal and professional expenses, b) advances written off, and c) travelling & conveyance expenses. The assessment order was then upheld by the CIT(A). The assessee also contested penalty proceedings initiated against it and claimed to have been denied a proper opportunity to present its case, and alleged violation of the principles of natural justice.
On appeal, the Tribunal held that,
Whether an expense is to be disallowed only because there is a sharp rise in it as compared to previous years - NO: ITAT
++ the assessee submitted the details of legal and professional fees which included fees for legal and technical consultancy, industrial information report and data base, modern quantitative technical case, leadership development and training of staff, taxation and audit services, human resource, consultancy management, consultancy and industrial marketing research services. Merely because there is a substantial increase in the amount of expenses, the disallowance cannot be made. The lower authorities could not say that any of the services obtained by the assessee was not for the purpose of business of the company. The assessee gave the names of the consulting companies which are definitely of necessary services looking to the size and nature of business carried out by the assessee. As the assessee has entered into the business of marketing of washing machines and refrigerators the market research analysis service as well as industrial reports are necessary for the purpose of business. The assessee submitted the complete details of such expenditure where the amount of expenditure as well as the nature of retainership charges were shown. None of the expenses can be said to be disproportionate to the business of the assessee. The assessee has provided details of major expenses of legal fees for Tri Legal as well as KPMG both the services are for the purpose of the business of the assessee. Thereby, the disallowance made by the AO cannot be sustained, when the details of legal expenses are available with the AO where each and every party to whom the fees is paid is mentioned. Merely ad hoc disallowance without pointing out any specific defect in details showing that it is not related to the business, such disallowance cannot be sustained;
Whether if the assessee pays advances for conducting a research project for its business and later scraps the same, the advances being written off are admissible - YES: ITAT
++ w.r.t. the disallowance written off by the assessee, it is claimed that this sum was given to one of the company named Frost and Suilliven for preparing a report for the business of the company. This advances were written off during the year as the service provider did not provide further information about the assignment of the work. The assessee gave the assignment to the above party for strategic analysis of power sector in India and mapping of selected competitors for the power equipment sector. The original fees offered was for Rs. 550000/- which was accepted vide letter dated 01.08.2006 according to that offer letter 50% of such sum was payable as advance. The assessee paid the same advance and subsequently it was decided that the above assignment is not to be carried forward and hence written off the above sum. The AO has disallowed for the reason that income to the extent of this amount of advance has not been credited to the profit and loss account. The CIT (A) also confirmed the disallowance as the reply of the assessee was general in nature. However, the assessee is exploring the new business opportunity in the power sector and for that it hires a consultancy to carry out certain studies as the assessee is engaged in the business of support services. The assessee has obtained this project during the year and hence legal fees paid was written off. Thereby, the assessee was eligible for this deduction of expenses as it has incurred it for the purpose of the business and for consultancy expenses to be allowed i.e. deduction of income tax nowhere provided that corresponding credit to the profit and loss account should have been given. Hence, the disallowance merits being deleted.
Whether expenses incurred on the Director's relocation to a foreign destination and on his annual holiday with the family are to be construed as business expenses rather than perquisite - YES: ITAT
++ during the year concerned the assessee claimed travelling and conveyance expenses and submitted details of such expenses. The AO held that there was a substantial increase in the expenses compared to previous year and further certain expenses had been paid through credit card and also for travelling of the family members of the staff. Hence, it was disallowed, and the same was confirmed by the CIT(A). The assessee submitted that traveling expenses of Rs. 16518633/- were paid for club expenses through credit card which are related to travelling expenses. An amount of Rs. 387584/- was paid for a Director, who is an employee of the company and his family members for travelling expenses and further Rs. 325170/- was also paid for air ticket for Tokyo. It was submitted that these expenses were incurred by the assessee for the relocation of employee, who are designated as directors by the company with their family as well as in connection with annual holiday of the directors. These expenses are in terms of employees employed with the assessee. The assessee is a subsidiary company of a Japanese company. Therefore, a person such as Director can be travelling for the purpose of business etc by the employee of the company to Japan and hence, these expenses are necessarily incurred for the purpose of business of the assessee. None of the expenditure of travelling are related to the share holder owners of the assessee company. As the relocation expenditure and transfer expenditure which is incurred for the purpose of the business is not the perquisite in the hands of the assessee therefore, naturally they are not entering into the Form No. 16 issued to those employees. It was further stated that merely because FBT is not paid does not make the expenditure disallowable. The AO & CIT(A) have not appreciated the contention of the assessee in the right perspective and merely compared the increase in expenditure with the previous year and then disallowed the same. They have completely overlooked the fact that during the year company has started trading activities of refrigerators and washing machine. Hence the disallowance of Rs. 877940/- on account of travelling and convenience expenses merits being deleted.
++ assessee's appeals against interest proceedings u/s 234 and against insurance and penalty proceedings stand dismissed.
Assessee's appeal partly allowed
